Property Sprocket Looks to Shake Up the Real Estate Listing Space
Melanie Murr says it took her only a few months in the real estate industry to realize it was ready for major change. The commissions were steep, the technology was years behind other industries, and agents who lacked mandatory training often left clients wanting better customer service.
“Almost immediately I knew we could build something that could do better, that was more concerned with protecting and getting information to the consumer rather than maintaining the status quo for a really outdated industry model,” she says.
That dream has become a reality in 2017. Murr has teamed up with tech-industry veteran Sean Montgomery to launch Property Sprocket, a Baton Rouge-based startup looking to disrupt the real estate market by dramatically lowering the costs to list a house while increasing the level of customer service to sellers. The co-founders launched their first product this summer for the Baton Rouge market and have plans to expand.
“The real estate industry is ripe for a shakeup,” Montgomery says. “It’s kind of been the same model for the last 100 years or so.”
At the heart of Property Sprocket’s business model is the notion that while technology has drastically lowered the cost of listing a home, those savings have not been passed along to the consumer, with listing agents still taking fees of thousands of dollars with each home sale.
“We want to dramatically lower the cost of selling your home, giving people the ability to keep more of their equity instead of giving it to a real estate agent,” Montgomery says.
He says a common use case for the product would be a family that has outgrown its starter home and is looking to sell it for $200,000. Normally the commission for such a sale would be 5 to 6 percent, or $10,000 to $12,000, with half going to the buyer’s agent and half going to the listing agent.
Property Sprocket, however, serves as the listing agent for a flat fee of $495, with the buyer’s agent receiving a 2.5 percent commission at closing. “That saves them easily $5,000 in fees,” Montgomery says of the $200,000 starter home example. “For a family in that stage, that’s real money.”
Murr says it’s possible for Property Sprocket to offer such low fees without compromising the customer experience because the process for selling a house has changed so much over the past 20 years. “A lot of it’s already automated anyway,” she says. “You’re going to get the exact same thing you would get with a full-priced agent. You’re just more in control.”
The company aims to give customers as little or as much assistance as they want or need, while also offering the same services that a home seller would expect a traditional agent to provide.
That includes providing signs and lockboxes for the property, assisting with negotiations related to the inspection and contract, professional preparation of all legally required documents and syndicating each listing on all major brokerage websites. Other features include 10 to 15 high-quality photos, social media and email marketing, as well as automated showing scheduling.
Murr says the top two complaints she heard in the real estate industry were the high price of commissions and that real estate agents didn’t keep customers informed throughout the process.
That’s why Property Sprocket designed a customer portal to keep sellers connected with every step in the sale of their homes. The portal lets sellers track the entire process, including important dates and notifications for new showings, and offers easy access to key documents needed for the sale.
Looking to Grow
The company, which was founded in August and has set up shop in the Louisiana Technology Park, has developed what it calls “version zero” of its product and is focusing on customer feedback while looking to spread the word about the product to boost awareness in the marketplace. Montgomery says they’re encouraged by similar models that have taken hold in the United Kingdom and Australia. He says customer feedback in the local market has been positive.
“It’s been a quick ramp-up so I don’t feel like we’re completely where we want to be,” he says. “But we’ve got version zero and it works.”
Although they’re still working through an initial version of the product, the founders are not starting completely from scratch. Last year they launched a traditional real estate company, which is still operating under the control of another agent, to investigate opportunities to use technology in the industry. That company led to Property Sprocket.
The company for now is focusing on the nine-parish Greater Baton Rouge area but hopes to expand into the New Orleans and Northshore markets in the near future, with more ambitious plans to extend beyond Louisiana.
“We want to perfect our model before we start to expand into other markets,” Murr says.